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Sandeep Ahuja & Co.

Established in the year 1986, we are a leading chartered accountancy firm based in Delhi & NCR rendering comprehensive professional services which include statutory audit, internal audit, direct tax, transfer pricing, GST, bank audit, propriety audit, cost accounting, internal financial controls and risk advisory.

Thursday, May 7, 2015

Highlights of Goods & Service Tax (GST) Passed at Loksabha

As GST is passed by Lok Sabha, some important
points in this aspect are given below:

Single Taxation System:-

GST is single taxation
system for Goods and services such as vat, service tax, excise, entertainment
tax, Luxury tax etc. Single taxation system across the country for goods &
services is the basic principal behind GST.

Only Two Taxes :-

New proposal
of GST is having only two taxes on all goods and services:-

2. Under GST regime, Area Based Exemption is not expected to be continued.

3. Provide Direct Investment Linked Cash Subsidy.

Zero Rating Vs Exemptions

Zero Rating

Exemption

Actual Benefit is given

Theoretical Benefit

Tax relief at all levels

Tax Relief only at one level

Credit Chain Continues

Credit Chain Broken

No tax on value added at all

Tax on value added of a particular dealer is foregone/exempted

Revenue Neutral Rate (RNR)

Since the GST is primarily intended as an exercise in reforming the consumption tax in India and not an exercise for additional resource mobilization through discretionary changes, the CGST and SGST rates should be such rates which would yield the same revenue as collected from various taxes which will be subsumed in the CGST and SGST, that is, it should be RNR. That is to say the revenue to Government is same as it is earned prior to introduction of GST.

Registration

The GST Registration Number would be a 12 Digit Alpha Numeric PAN Based Number

Other Points

1. Alcohol and
petroleum product are kept out of GST.

2. Tax on tobacco
products will be subjected to GST. But Govt. can levy the extra excise
duty over and above GST.

3. The Small
taxpayer whose gross turnover is less than 1.5 crore are exempted
from CGST an SGST.

4. PAN based identification number will
be allowed to each taxpayer to have integration of GST with Direct tax.

5. Exports
are fully exempted with Zero rates.

6. For 5 years loss of
revenue generated by state will be compensated by Central

(Compensation
will be on a tapering basis i.e. 100% for first three years,75% in the fourth
year and 50% in the 5th year.)

7. GST is a Destination-based
Tax.

8. Additional Tax
of not more than 1
% on supply of goods in the course of interstate trade for
a period not exceeding 2 years, or period recommended by GST.The additional tax shall be assigned to the states from where such supplies originate9. New Form GST 1 will be introduced10. No need to file these forms-ERI and 6,Vat Form, CST Form,ST3